9911796707
TMI Blog2004 (1) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... original suit filed by M/s.Babulal Agrawal. The Food Corporation of India (for short 'FCI') invited tenders for hiring plinths for storing foodgrains. The plaintiff submitted his tender which was ultimately accepted vide letter dated 11.6.1985. The rent was to be @40 paisa per sq.ft. The acceptance of tender and the conditions of contract had again been confirmed by the letter dated 19.8.1985 written by the Regional Manager. An agreement dated 12.2.1986 was entered into between the parties. The case of the plaintiff is that the defendant had given out to hire the plinths for a period of three years with an option to the defendant to extend by another year. The construction of plinth etc. could not be constructed within the time as agreed. However, ultimately it is undisputed that the same were completed and handed over to the defendant on 24.1.1987. No formal lease deed was executed. The defendant on 26.9.1988 gave 15 days' notice for vacating the plinths and vacated the same on 10.10.1988. The rent upto the said period was paid. According to the plaintiff it amounted to breach of the terms of the contract by the defendant, hence filed a suit for damages for an amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in all respects and after obtaining a completion certificate from the party no.2 or any of its officer nominated by party no.2 is this behalf, party no.1, would hand over the plinths and other facilities to the party no.2 under lease agreement to be executed between the parties in the prescribed proforma prescribed by the party no.2. The necessary stamp duty as per requirement for execution of lease deed shall be borne by the party no.1. 9. It is understood that the time is evence of this agreement. In the event of any delay the completion of the plinth and other facilities or if there is a faulty workmenship or the structure is found to be defective, the party no.2 would not be bound to take the plinths on lease and the earnest money deposited by the party no.1 shall be forfeited. The decision of the opposite party no.2 would be final in this regard and shall not be questioned by the party no.1. The earnest money shall also be forfeited in case the party no.1 alters, modified the terms of the agreement, withdraws and the offer, charges, etc. The construction of the ownership and/or fails to complete the construction of plinth and other facilities within the time stipul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t time and again that the defendant would utilize the plinths constructed by the plaintiff for a period of three years. As a matter of fact, on completion of the construction the defendant did occupy the plinth and had been paying rent as agreed but terminated the tenancy by serving a notice of 15 days' as per the provisions of Section 106 of the Transfer of Property Act and vacated the premises on 10.10.1988. In connection with this point it may be worthwhile to notice that the defendant itself had admittedly written a letter dated 16.10.1986 to the United Commercial Bank mentioning therein that the lease was a period of three years and the rent payable to the plaintiff would be directly remitted to the bank as against the loan advanced to the plaintiff. Learned counsel for the respondent has also taken us through the correspondence showing that there was an arrangement for deposit of the amount of rent by the defendant in the bank to adjust the loan taken by the plaintiff from the bank for construction of the plinths. The construction was also made in accordance with the design and specifications as provided and prescribed by the FCI. Considering all such facts as were clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that even a monthly lease may last for more than a year and for any longer period. In our view, the Trial Court and the High Court have rightly held that in absence of any lease deed or a registered lease deed the nature of the lease would only be that of a monthly lease. But it does not mean that it would deprive the plaintiff of damages for breach of terms of an agreement in accordance of which he had performed his part of the obligation by creating a liability against himself by taking loan from bank later only to be told that it all will be of no consequence as agreed in the agreement since no lease was executed and registered. The plinths were constructed in accordance with the design and specification given by the defendant. It may be of no use to any other person and for any other purpose. In this background as what was held out by the defendant, assumes importance and in case one who holds out a promise, backs out, will have to compensate the party who acted bonafidely on the basis of the promise made. As indicated earlier, even the tender notice, besides other correspondence, all gave out that the defendant would occupy the premises for a period of three years. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty Act and Sections 17(1) and 49 of the Registration Act, 1908. This decision, therefore, would not help the appellant in the instant case since it is nobody's case that right of tenancy was created by virtue of agreement dated 12.2.1986. The said agreement only provided for execution by a registered sale deed. The agreement has never been treated as a lease deed by any Court or the respondents. What has been found material in this case is that right from the beginning with the publication of the tender notice till the end, it was given out, including in the agreement, that the appellant shall hire the premises for a period of three years. This period of three years has been described as guarantee period by the appellant itself during which lease was to continue. We have already held earlier that agreement dated 12.2.1986 itself not being a lease deed was not registerable. The case basically hinges on the undisputed fact that a promise was held out by the appellant to the respondent to hire the premises for three years in response whereof the respondent had parted his possession, as held earlier. It may also be worthwhile to point out that the Board of Directors of FCI con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or. The agreement dated 12.2.1986 would squarely be covered by clause (v) of Sub-section (2) of Section 17 quoted above. Since it merely creates a right to obtain another document which will when executed would create such a right. It would be necessary to refer to the conditions of the agreement at this juncture. Clause 8 of the agreement quoted earlier is clear, in providing that upon completion of the plinths etc. the premises would be handed over to the defendant under a lease agreement to be executed between the parties in the prescribed proforma. Thus clause 8 only talks of execution of a lease deed between the parties in a prescribed proforma under which the defendant would be entitled to get possession of the premises on completion. The necessary stamp duty was to be borne by the plaintiff. It is thus clear that agreement dated 12.2.1986 itself is not a lease deed requiring registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e defendant. It was thereafter that the possession was to be handed over under the lease agreement which was to be executed between the parties. The construction was to be strictly in accordance with the directions and specifications of the defendant. Condition no.9 also contemplated that if the structure was found defective or workmenship was faulty the defendant could refuse to take possession of the premises and the earnest money was liable to be forfeited. Hence it is evident that no possession, right or title had passed on in praesenti at the time of execution of the agreement, and there were many prior conditions attached thereto. Such an agreement, in our view, has been rightly held to be only an executory agreement and not an agreement creating rights in the immovable property, hence not compulsorily required to be registered. It was a mere agreement between the parties which was not registered but was admissible in evidence. The next contention has been raised that the suit filed by the plaintiff was barred by time. The tender was accepted by the appellant on 11.6.1985. The premises were handed over to the defendant on 24.1.1987. The defendant gave 15 days' notice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be barred by time and proceed with the case but in that event the Court would not be required to record any such finding unless any plea is raised by the defendant. In this connection, learned counsel for the respondent has placed reliance upon a decision reported in (1964) 1 SCR p.495 at page 506, Ittavira Mathai Vs. Varkey Varkey Anr., wherein it has been held that if it is a mixed question of fact and law, a party would not be allowed to raise it later on, in case such an objection was not raised at the earliest. We, however, find that the period of limitation would be three years as the matter would be covered by Article 55 of the Limitation Act as pointed out by the learned counsel for the respondent. Article 55 reads as under : Description of suit Period of Time from which Limitation period begins to run 55. For compensation for the When the contract is breach of any contract, express broken or (where there or implied not herein are successive specially provided for three years breaches) when the breach in respect of which the suit is instituted occurs or (where the breach is continuing) when it ceases. In the case in hand, as indicated above, the notice term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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